Higher Education in Real Estate and Responses to Revolution in Real Estate Jobs

The world of real estate has gone through considerable upheavals over the past 15 years. New professions have cropped up (asset management and consulting) with other areas like real estate expertise and investment undergoing significant change. Corporate property management has also grown in professional stature. To response to this revolution, a postgraduate programme in Real Estate should fulfill 3 conditions examined in this his paper. Firstly, the architecture of the programme must balance courses run by academics and professionals. Two major obstacles await a postgraduate programme in real estate. The first is an overly academic approach lacking in practicality. The second is just as dangerous and involves empowering practitioners alone, under the premise that they will have a better insight into the real world. Above and beyond the need to find a balance between these two poles ñ which in all likelihood will ideally involve a 50/50 split between theoretical courses run by academics and professionalsí practical presentations - I considere it imperative that any postgraduate real estate programme syllabus start with academics offering students a theoretical framework evoking concepts and issues of use to them. In much the same way as we operate at IMPI, the ideal is to get practitioners involved during the latter half of the programme, at the same time as students engage in long-term internships enabling them to compare their own experiences with practitionersí. Secondly, the syllabus must take into account the financialisation of real estate over the past 15 years by strengthening a financial approach to real estate within the syllabus. The most crucial change over the past 15 years has been the advent of financial expertise and investment as real estate topics. This has been a clear trend in France since 1993 with the arrival of US funds that started buying commercial property on the basis of discounted future flow calculations. Real estate expertise must therefore be taught no longer only using comparative methods as people used to do in the past but also by applying discounted cash flows, hedonist methods, etc. Above and beyond the new evaluation methods, consideration must also be given to financial innovationís impact on real estate. This will specifically entail derivative products for which real estate constitutes an underlying asset, ranging from real estate indexes to securitised real estate assets (not just the infamous subprime loans but also sectorial securitisations involving residential real estate, commercial property, etc.).Lastly, the identification of real estate asset classes (and their many sub-categories, including residential property, logistics and the hotel sector) will require a comparison between yields and performances in real estate versus opposed to other asset classes. Long-term government debt is useful at this level since it enables a calculation of risk premiums and an identification of possible speculative bubbles (i.e. in 2006 and 2007, yields on UK property were lower than on Gilts, a clear sign of a bubble). Thirdly, the director of the program has to choose professionals who are competent and good teachers. It is relatively easy for the director of a postgraduate programme in real estate to find top quality professionals willing to give classroom talks - but much harder to find ones who are competent but can also teach, i.e. who can devise a original and structured module lasting at least 3 hours with teaching methodologies built around a simple 60 or 90 minute conference. Here, the only way that programme managers can identify poor teaching is through student feedback. Any problems evoked will then have to be diagnosed. Most likely, they will stem either from the individualís lack of teaching experience, in which case s/he will require a certain amount of additional training, or from his/her fundamental inability to teach, meaning that s/he will have to be replaced. To maintain a top notch postgraduate programme in real estate, the director must track professional and technical changes by scanning professional circles (hence the usefulness of being an RICS member) and maintaining up-to-date knowledge of state-of-the-art research literature. Lastly, although todayís financial and real estate crises have clearly been a major shock for the profession, academics must keep their ìeye on the ballî and work to ascertain ñ above and beyond the sectorís current chaotic situation ñ future signs of recovery and, above all, the emergence of new professions and practices.